Olszewski v NSBAR: Code of Ethics’ Article 14 Upheld by Court

An Illinois court has considered a member’s challenge to discipline imposed by a REALTOR® association for a violation of Article 14 of the National Association of REALTORS® (“NAR”) Code of Ethics (“Code”).

Donna Harris (“Homeowner”) filed a complaint with the North Shore-Barrington Board of REALTORS® (“NSBAR”) against Michael Olszewski, a REALTOR® (“Challenger”). The complaint alleged that the Challenger had invaded her privacy in violation of Article 12 of the Code when there was a mix-up over keys in a condominium complex where two units were listed for sale.

The Challenger responded to the complaint by having his lawyer write a letter to the Homeowner, threatening to bring a lawsuit against the Homeowner for intentional infliction of emotional distress. A NSBAR hearing panel considered the complaint against the Challenger, and the panel determined that the Challenger had not violated Article 12. However, the panel did find that the Challenger had violated Article 14 by sending the threatening letter to the Homeowner. For his Article 14 violation, the Challenger was ordered to take an ethics course within 6 months. Failure to comply with the sanction would result in a $500 fine, and he would still need to take the course.

Article 14 provides that “REALTORS®…shall take no action to disrupt or obstruct” the professional standards hearing process. Further, interpretative Standard of Practice 14-3 explains that Article 14 prohibits “instituting or threatening to institute actions for libel, slander, or defamation against any party…[based on] an ethics complaint.”

The Challenger filed a lawsuit, arguing that Article 14 violated his constitutional right to due process and equal protection, naming both NAR and NSBAR in the lawsuit. NAR and NSBAR filed a motion to dismiss the lawsuit.

The Circuit Court of Cook County, Illinois, Chancery Division, granted NAR and NSBAR’s motion to dismiss the lawsuit. First, the court considered the Challenger’s constitutional arguments. Since the constitution applies to the “state” and not private organizations, the court found that NAR and NSBAR could not violate the Challenger’s constitutional rights. Thus, the Challenger could not allege a constitutional violation against either organization.

Next, the court considered the Challenger’s other arguments. Illinois courts are reluctant to interfere in the disciplinary proceedings of an organization that an individual voluntarily joins, unless there is a showing: that the association did not follow its bylaws; the association’s rules and/or proceedings violate concepts of fairness; or when an association’s process was motivated by bad faith.

The Challenger did not allege that NSBAR had acted in bad faith or did not follow its bylaws, and so his only argument was that Article 14 was “unfair”. The court upheld Article 14 against this challenge, with the judge stating that he was “persuaded by the broader policy behind” the Code’s Article 14, as it serves the dual purpose of protecting the public while also promoting the reputation of the profession by encouraging the filing of grievances with REALTOR® associations. The court also found that the Challenger had no right to bring a defamation suit against the Homeowner. Therefore, the court dismissed the Challenger’s lawsuit.

Olszewski v. North Shore-Barrington Ass’n of REALTORS®, Inc., No. 12CH11329 (Ill. C.C. Ch. Div. Oct. 24, 2012). [Note: This opinion is not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]